This document covers key concepts in microeconomics including supply and demand, market structures, price controls, and normal versus inferior goods. It provides definitions and examples of demand, supply, price ceilings, price floors, buffer stocks, and different market models. Situations that cause supply to shift left and the effects of a drought on the corn market over time are also examined using supply and demand diagrams.

1. Week 6 Total Pts. = Quick Quiz Define demand. Amount of a good consumers are willing and able to buy at a given price.

2. Week 6 Total Pts. = Define supply. Quantity of a good or service a seller is willing and ableto provide at a given price over a particular time period.

3. Week 6 Total Pts. = What is wrong with this statement: “As price goes up, demand goes down.” Overall demand does not go down; quantity demand goes down.

4. Week 6 Total Pts. = Why does the demand curve slope downwards, and why does supply slope upwards? Quantity demanded and price have a negative relationship, while quantity supplied and price have a positive relationship.

5. Week 6 Total Pts. = “Michael Jackson has died!” How will this affect supply and demand for his music? Price S Supply and demand will both shift to the right. D 0 Quantity

6. Week 6 Total Pts. = “A drought has destroyed the crops!” How will this affect supply, demand, and price for corn over time? Price S D Supply will first shift to the left, which will increase price and decrease quantity demanded. 0 Quantity

8. increase in taxes on goods

9. increase in price of raw materials

10. More producers in the market

11. Price of substitute producer goods0 Quantity

12. Week 6 Total Pts. = In order for there to be a market, what do we need? A buyer and a seller (and scarcity)

13. Week 6 Total Pts. = Using a diagram, explain what a price ceiling is, and what three consequences are of doing this. Shortages Queuing (waiting lists) Rations Black markets for goods

14. Week 6 Total Pts. = Explain what rent control is, and what happens to the apartments over time if a rent control is imposed. A maximum price at which sellers can sell homes/apartments. Over time the properties will deteriorate because it will be too expensive for maintenance.

15. Price Surplus S D 4 3 Price Ceiling 2 Quantity of icecreams 200 600 100 Week 6 Total Pts. = Using a diagram, explain the concept of a price floor. Why would a government do this? A minimum price at which sellers can sell goods or services. This could be to help out farmers who need to cover costs of production, or to create a higher wage to protect workers.

16. Week 6 Total Pts. = Explain the concept of a buffer stock, and give an example. Buying and stockpiling the product when prices are too low. (Example: olive oil video)

17. Week 6 Total Pts. = Name the four markets and explain how they are different. Monopoly – one firm Oligopoly – a few large firms Monopolistic competition – many medium sized firms selling different products Perfect competition – countless small firms selling similar products

18. Week 6 Total Pts. = What does ceteris paribus mean and why is it important in economics? All else equal – to study the change on demand, we need to assume other things are the same. To study how price affects demand, we need to assume income, population, etc. stay the same.

19. Week 6 Total Pts. = What is the difference between a normal good and an inferior good? Give examples of each. Normal good – as income increases, demand increases. (Cars) Inferior good – as income increases, demand decreases. (Use of public transportation)

20. Week 6 Total Pts. = If there is time, refer to the multiple choice questions in the book.